Provisional deal reached on emissions reductions in non-ETS sectors

5 January, Brussels - The Council of the EU and the European Parliament have agreed on a provisional deal for the Effort Sharing Regulation (ESR), proposed by the European Commission in 2016 to provide targets for reducing greenhouse gas emissions in sectors not covered by the Emissions Trading Scheme (ETS).

The ESR complements existing emission’s reductions initiatives including the ETS and the Land Use, Land Change and Forestry (LULUCF) regulation, and collectively they aim for a 40% reduction in Europe’s greenhouse gas emissions by 2030, compared to a 1990 base level.

The ESR will set targets for each EU Member State in the agricultural, waste, building and transport sectors, to achieve an overall reduction of 30% of emissions by 2030, compared to 2005 levels. The ESR will take effect in 2021 and each country has different targets, based on GDP per capita, ranging from 0% for Bulgaria to 40% for Luxembourg and Sweden.

An emissions reduction path will be established for member states to ensure that emissions are reduced at a constant pace from 2021-2030, and the starting point for this path will be based on average emissions from 2016 to 2018. The start of the trajectory in May 2019 or in 2020, depending on which gives the lowest allocation for the Member State.

Additionally, a safety reserve has been established to help less wealthy Member States which may miss their 2030 targets despite achieving their targets for 2013-2020. However, Member States must use current flexibilities first, whereby they can bank, borrow and transfer annual emissions allocations between countries from one year to the next.

Two new flexibilities are also being introduced:

The one-off ETS flexibility will allow member states which did not receive free allocation for industrial installations in 2013, or which are required to fulfil emission reduction targets above the EU average and their reduction potential, to cancel a limited number of EU ETS allowances;

The LULUCF flexibility will enable member states to make limited use of net removals from certain land use, land use change and forestry. This will also include credits from managed forest land once the forest reference levels have been adopted under the LULUCF regulation and from wetlands when accounting for them becomes mandatory under that regulation.

The Council will formally debate the provisional deal by the end of January, and it will then go to formal approval in the European Parliament. The legislation will enter into force 20 days after adoption by the Parliament.